A Finance Ministry notification issued late Wednesday revealed a reduction in windfall taxes on exports of diesel and aviation turbine fuel (ATF). Export duty on diesel decreased to Rs 16 per litre from Rs 20 per litre, while the ATF tax dipped to Rs 10.5 per litre from Rs 15 per litre. The new rates will go into effect today, October 1, 2026.
Export duty on petroleum, on the other hand, stays the same at Rs 0.5 per litre.
The news surfaced around the same time oil marketing companies (OMCs) increased the price of commercial liquefied petroleum gas (LPG) by Rs 62.50 to Rs 2,810 per 19-kg cylinder. Meanwhile, the rate for domestic LPG cylinders remains unchanged at Rs 942 per 14.2-kg cylinder in Delhi. ATF prices rose by Rs 16 per litre to Rs 137 a litre for domestic airlines.
Windfall taxes on fuel exports were first imposed in July 2020, but were subsequently pulled back two years later. They were brought back earlier this year in March as a measure to ensure domestic availability of fuel following a drastic crude price surge tied to the US-Israeli war on Iran. Several public sector and private refiners in India process crude oil and export finished petroleum products. A windfall tax serves as a disincentive to focus on exports, ensuring domestic availability instead.
With export levies currently reviewed every fortnight, the government makes changes based on international crude oil and petroleum product price movements.
Rates reduced in September
Before Wednesday’s rate revision, a September 16 update also cut diesel export duty to Rs 20 per litre from Rs 25 per litre, while the ATF levy was brought down to Rs 15 a litre from Rs 19 a litre. At the time, the petrol export tax was also slashed to Rs 0.50 per litre from Rs 1.50 per litre, which remains unchanged now.
A look at the global fuel crisis
Globally, the International Air Transport Association’s (IATA) Jet Fuel Price Monitor further showed that jet fuel averaged about $99 a barrel on February 27, the day the war on Iran started. Citing data from S&P Global Energy Platts, the association reported prices more than doubled to $209 by early April, dropped for nearly three months, and hit $195 a barrel in mid-September, according to the Associated Press.
June’s official US consumer price index data revealed that American domestic airfares are 26.5% higher than a year ago. Experts have since sounded the alarm on airfares potentially staying high even if a subsequent ceasefire between the United States and Iran drops oil and jet fuel prices, according to a Guardian report.
The deepening shortage of jet fuel, one of airlines’ largest operating expenses, has led to carriers cutting some less profitable flights and increasing fares and baggage fees. The Argus US Jet Fuel Index plummeted from an early April high of $4.99 a gallon to a wartime low of $2.70 in June, the Associated Press reported.